Rural India Snaps Up Mobile Phones

Wednesday, February 11, 2009

By Eric Bellman

In the village of Karanehalli, a cluster of simple homes around an intersection of two dirt roads about 40 miles from India’s high-tech capital of Bangalore, Farmer K.T. Srinivasa doesn’t have a toilet for his home or a tractor for his field. But when a red and white cellular tower sprouted in his village, he splurged on a cellphone.

While the way his family threshes rice — crushing it with a massive stone roller — hasn’t changed for generations, his phone has changed the way he farms. He uses it to decide when to plant and harvest by calling other farmers, to get the best prices for his rice, coconuts and jasmine by calling wholesalers, and to save hours of time waiting on the road for deliveries and pickups that rarely come on time.

“Life is much better with the cellphone,” he said from his rice paddy in the shadow of the new tower. “I bring it with me to the fields and anyone can reach me here.”Even amid the global economic slowdown, one Indian industry continues to boom: selling cellphones to the rural poor.

Economists have slashed Indian economic growth forecasts for this year and the stock market is in the doldrums. But cellphone companies are signing millions of new subscribers a month, making India the fastest growing mobile-phone market in the world. There is no sign of a slowdown yet: figures to be released later this month are expected to show that new subscriptions in January reached a record 11 million.

The demand for cellphones is coming mainly from rural consumers, who typically earn less than $1,000 a year. These buyers haven’t been affected by plunging stock and real-estate prices or tighter bank lending since they typically don’t own land and don’t borrow. A large majority of them don’t have access to regular landline phone networks — there are only about 40 million landline subscribers in India — so once cellular coverage comes to their towns or villages they scramble to get their first phones.

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Source: The Wall Street Journal (link opens in a new window)